posteriori/E+ via Getty Images
European natural gas prices next summer could be 20% lower than current estimates, due to reduced demand from power plants and plentiful supplies in storage, consultant Wood Mackenzie said Wednesday in a new report.
Europe is heading into the colder months with stockpiles above the seasonal norm, and gas use for power has dropped, with renewables gaining market share, nuclear output rising, and economic pressures hurting industrial and residential consumption.
“The European gas sector looks set to see a fall in gas demand that will have a knock-on effect for prices next year,” Wood Mackenzie said. “Gas in power is expected to decline by 12% year-on-year in 2024, a similar decline to that of 2023.”
The firm expects a tighter market in 2025, when Russia’s gas transit deal with Ukraine expires, global LNG supply additions will be gradual and Asian demand for the fuel will increase, limiting volumes available for Europe.
ETFs: (NYSEARCA:UNG), (UGAZF), (BOIL), (KOLD), (UNL), (FCG)
In the U.S., Bank of America said while the Texas heatwave cut the natural gas storage surplus nearly in half, a mild winter could drive inventories to records and push prices below $2/MMBtu in Q1 2024.